The most important distinguishing feature of the neo-liberals is their declining confidence in human progress. Unlike the traditional liberals, the neo-liberals are far less optimistic about progress and cooperation .This, however, does not mean that they are as pessimistic as the Realist or Neo-realists as seen in the previous Unit. As a category, the term neo-liberal refers to post-war liberal scholars who retained much of the belief of the traditional liberals except perhaps sharing their optimism. In the Pre-second World War period, most liberal writers had a strong belief in the growing, slow but steady, realization of human freedom. However, in the post-war period, the new generation of scholars became much more reluctant about committing themselves to the liberal notion of progress.
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The lack of optimism among the new generation of liberals was grounded in a number of considerations. As noted by Zacher and Matthew, “liberals {neo-liberals} have not wanted to be branded as idealists as were many interwar liberals; the international events of this century (including two world wars and the cold war) have made them wary about being too optimistic, and, in keeping with the ethos of contemporary social science, many have felt more comfortable about explaining than predicting”.In the academic world, neo-liberal generally refers to neo-liberal institutionalism (one of the strands of liberalism, which we shall discuss in detail later on this Unit) or what is now called institutional theory.
However, in the policy world, neo-liberalism has a different connotation. In the domain of foreign policy, a neo-liberal approach seeks to promote free trade or open markets and Western democratic values and institutions. Inspired by such an ideology thus most of the Western liberal democracies have rallied around United States in its call for the “enlargement” of the community of democratic and capitalist nation-states. This brand of liberalism (Neo-liberalism) draws its ideological strength from the belief that all financial and political institutions created in the aftermath of the Second World War have stood the test of time, which provides the foundation of contemporary political and economic arrangements. What further adds weight to such a view I the belief that these financial and political institutions were created and are being sustained by policy-makers who embrace neo-liberal or Realist/Neo-realist assumptions about the world.
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As noted by Steven L. Lamy: “In reality, neo-liberal foreign politics tend not to be as wedded to the ideals of democratic peace, free trade, and open borders. National interests take precedence over morality and universal ideals and, much to the dismay of traditional Realists; economic interests are given priority over geopolitical ones”.The post-War liberalism or neo-liberalism is broadly divided into four main standards of thinking: institutional liberalism. Sociological liberalism, Republican liberalism, and Interdependence liberalism.